Connect Issue3 2013web

CAI-GRIE’s mission is: To make a positive contribution to the Common Interest Development Community through education and networking.

connect A Publication of the Greater Inland Empire Chapter of CAI

ISSUE three 2013

BOARD MEETINGS Help is on Its Way! A Business Partner’s Perspective Yea! I’m on the Board The New Interested Director’s Statute Best Practices for Association Liability Management Budgeting Tips for Board Members The One Hour Board Meeting Board Meetings with the Community’s Builder

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connect Table of Contents A Publication of the Greater Inland Empire Chapter of CAI

www.cai-grie.org

OFFICERS Lana Hamadej, LSM, PCAM...................................................... President Avalon Management Group, AAMC Kimberly Lilley, CMCA, CIRMS..........................................President-Elect Berg Insurance Agency, Inc. Matt D. Ober, Esq., CCAL ............................................... Vice-President Richardson Harman Ober, PC Tiffani Reynolds......................................................................... Secretary Rodent Pest Technologies, Inc. Nick Mokhlessin......................................................................... Treasurer ValleyCrest Landscape Maintenance Robert Riddick, CMCA...................................................... Past-President Sunnymead Ranch Planned Community Association

Features 4 Keeping It Civil & Getting Association Business Done 6 Model Code of Ethics

Dori Kagan, CMCA, CCAM-Emeritus.......................Pacific Premier Bank Linda Krebs ..................................................... Flower Lighting & Electric Dana Mathey, CMCA, AMS, PCAM....... Euclid Management Company Shelly Risbrudt............................................Pilot Painting & Construction

10 The New Interested Director Statute and Conflicts of Interest 12 An Examination of Best Practices for Association Liability Management

By Jasmine Fisher, Esq.

Kristie Rose, CMCA, AMS, PCAM, CCAM

FirstService Residential California, LLC

Alisa Toalson, CMCA, AMS, CCAM

Professional Community Management

Chapter Executive Director DJ Conlon, CMCA Editor in Chief Betty Roth, CMCA, AMS, PCAM...Avalon Management Group, AAMC

15 Budgeting Tips for Board Members

By Jan Hickenbottom, PCAM, CCAM

18 Board Meetings from a Business Partner’s Point of View

By Tom Carrasco

Publications Committee

20 Education: It’s Essential!

Tom Carrasco ....Environmental-Concepts Landscape Management, Inc.

By Brian D. Moreno, Esq.

Lana Hamadej, LSM, PCAM ..........Avalon Management Group, AAMC Jan Hickenbottom, PCAM, CCAM .......................................... First Bank Kimberly Lilley, CMCA, CIRMS............................ Berg Insurance Agency

22 Meeting with the Board and the Community's Builder

Robert Riddick, CMCA.......................................Sunnymead Ranch PCA

By Jeri Mupo, CCAM

Cang Le, Esq. .......................................... Fiore Racobs & Powers, A PLC

By Robert M. DeNichilo, Esq.

30 The One Hour Board Meeting

By Lana Hamadej, LSM, PCAM

Weldon L. Brown ........................................ Weldon L. Brown Company Linda Cooley.............................Rosetta Canyon Community Association

28 Yea! I'm on the Board! or OMG, What Did I Get Myself Into?

By Nancy I. Sidoruk, Esq.

By Dennis M. Burke, Esq.

BOARD DIRECTORS

26 Bowling Tournament Photos

Departments 7 President’s Message

By Lana Hamadej, LSM, PCAM

8 Editor’s Link

By Betty Roth, CMCA, AMS, PCAM

24 CAI Legal Forum: California Communities

By Kimberly Lilley, CMCA, CIRMS

27 Community Association Board Resolution for CAI-CLAC Contribution 31 Monte Carlo Night Photos

Mahendra Sami .................................................................... Union Bank Nancy I. Sidoruk, Esq. .............................Epsten Grinnell & Howell, APC Jasmine Fisher, Esq............................................ Beaumont Gitlin Tashjian Sheeba Yaqoot, Esq. ................................ Fiore Racobs & Powers A PLC DESIGN & PRODUCTION Kristine Gaitan..................Rey Advertising & Design/The Creative Dept.

All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Connect or the Community Associations Institute–Greater Inland Empire Chapter.

Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney.

Connect is an official quarterly publication of Greater Inland Empire Chapter of the Community Associations Institute (CAI–GRIE). The CAI–GRIE Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of the CAI–GRIE Chapter. Reproduction of articles or columns published permitted with the following acknowledgment: “Reprinted with permission from Connect Magazine, a publication of the Community Associations Institute of Greater Inland Empire Chapter.”

Copyright © 1998–2013 CAI-Greater Inland Empire Chapter.

Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter 5029 La Mart, Suite A • Riverside, CA 92507-5978 (951) 784-8613 / fax (951) 848-9268

The Greater Inland Empire Chapter of CAI hosts educational, business and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to Community Association owners and managers serving the Community Association Industry. It is expected that all participants in Chapter events — whether they be educational, business or social — will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter.

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By nancy I. sidoruk, Esq.

Keeping It Civil & Getting Association Business Done Rules of Procedure and Codes of Conduct

P

roductive board meetings are productive business meetings. However, the issues handled by community association boards are not necessarily easy.

Productivity can be sidelined by flaring tempers, controversy, interruptions and the challenges that come with addressing sensitive and sometimes complex matters. To successfully manage productivity and decorum issues that may occur at board meetings, a board might enact procedural rules to govern meeting conduct. A board might also consider adopting a code of conduct applicable to directors and other association volunteers.

Rules of Procedure

While some associations’ governing documents specify a particular “order of business” or parliamentary procedure (e.g., Robert’s Rules of Order), most do not (and if they do, are more likely prescribed for membership meetings, rather than board meetings). Thus, the majority of boards are left with little guidance on how to hold effective meetings which allow for efficient

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ISSUE Three 2013 • Connect with grie

conduct of business and which also facilitate a healthy level of member input.

Board meetings are supposed to enable the conduct of essential association business; they are not social events. From prohibiting consumption of alcoholic beverages at meetings to establishing time periods and guidelines for member input, standing rules of meeting procedure can help provide an atmosphere conducive to conducting business, preserving decorum, and facilitating member contribution.

The Open Meeting Act restricts the ability of community association boards to take action on non-agenda items, albeit with certain limited exceptions.

(Civil Code §1363.05(i)) In certain respects, these restrictions can be helpful to boards challenged by meeting interruptions and by the temptation to engage in excessive dialogue with

those in the “audience.” It is, of course, still important to encourage member attendance and participation at meetings, so more members become interested and participate in community activities.

Directors should note that although members will not always agree with every action taken by the board, member participation typically brings with it the potential to improve the board’s chances for achieving better long-term results for their community and minimize claims that the board lacks transparency. On the other hand, as those elected to handle the business of the association, the board must be permitted to conduct business without unreasonable interference. Thus, owner participation should remain orderly and be limited to the portion of the meeting set aside for such participation.

From establishing a “first, second, final warning” or similar system for admonishing those who interrupt board meetings, to setting forth the process and criteria for recessing and adjourning unmanageable meetings, and setting time periods and guidelines for member input, standing procedures for meeting conduct can be effective tools for conducting effective board business and ensuring fruitful member participation.

Codes of Conduct

While there is no statutory requirement for a director to execute a statement or agreement regarding ethics as a condition of serving on a board, many associations find such policies to be good general statements of what the board expects in terms of individual director performance.

A code of conduct or code of ethics is something that could be used for both the board and members of an association’s volunteer committees.

Professional and courteous treatment of fellow directors and of association management, employees (if any) and

vendors is necessary to accomplish the business of the association, and to help protect the association and its directors from liability.

Codes of conduct vary in their exact content and level of detail, yet their provisions typically target three objectives: maintaining decorum, facilitating efficient business operations and fulfilling fiduciary duties. In addition to keeping meetings civil and accomplishing association business, the need for directors to fulfill their fiduciary duties must not be overlooked. Director duties of loyalty, confidentiality and fair dealing are owed by each director to the association as a whole and are assumed upon taking office as a director. Adopting and adhering to a code of conduct can thus help an association and its directors minimize potential liability.

Although the policies discussed above are operating rules, in that they apply generally to the management and operation of the association or the conduct of its business and affairs, they are not among the specified rules subject to the rulemaking procedures of Civil Code section 1357.130. Before adopting rules of procedure for board meetings or a code of conduct, a board should nevertheless consult with the association’s legal counsel to review its proposed rules and policies or to assist in drafting such rules and policies to suit the association’s particular needs and concerns.

Nancy I. Sidoruk is an Attorney and Director of Practice Development at Epsten Grinnell & Howell APC, which has offices in San Diego, Temecula and Palm Desert. She serves as a delegate to CAI’s California Legislative Action Committee, chairs the CAI-GRIE Legislative Support Committee and is an active member of the CAI-GRIE Magazine Committee. connect with grie • issue Three 2013

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MODEL CODE OF ETHICS (An excerpt from “From Good to Great: Principles for Community Association Success,” www.caionline.org/info/help/Documents/Good2Great.pdf) CAI’s Center for Community Association Volunteers developed the Model Code of Ethics for Community Association Board Members to encourage the thoughtful consideration of ethical standards for community leaders. The model code is not meant to address every potential ethical dilemma, but is offered as a basic framework that can be modified and adopted by any common interest community.

Board members should: • Strive at all times to serve the best interests of the association as a whole regardless of their personal interests.

• Use sound judgment to make the best possible business decisions for the association, taking into consideration all available information, circumstances and resources.

• Act within the boundaries of their authority as defined by law and the governing documents of the association.

• Provide opportunities for residents to comment on decisions facing the association.

• Perform their duties without bias for or against any individual or group of owners or non-owner residents.

• Disclose personal or professional relationships with any company or individual who has or is seeking to have a business relationship with the association.

• Conduct open, fair and wellpublicized elections.

• Always speak with one voice, supporting all duly-adopted board decisions – even if the board member was in the minority regarding actions that may not have obtained unanimous consent.

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ISSUE Three 2013 • Connect with grie

Board members should not: • Reveal confidential information provided by contractors or share information with those bidding for association contracts unless specifically authorized by the board.

• Make unauthorized promises to a contractor or bidder.

• Advocate or support any action or activity that violates a law or regulatory requirement.

• Use their positions or decisionmaking authority for personal gain or to seek advantage over another owner or non-owner resident.

• Spend unauthorized association funds for their own personal use or benefit.

• Accept any gifts – directly or indirectly – from owners, residents, contractors or suppliers.

• Misrepresent known facts in any issue involving association business.

• Divulge personal information about any association owner, resident or employee that was obtained in the performance of board duties.

• Make personal attacks on colleagues, staff or residents.

• Harass, threaten or attempt through any means to control or instill fear in any board member, owner, resident, employee or contractor.

• Reveal to any owner, resident or other third party the discussions, decisions and comments made at any meeting of the board properly closed or held in executive session.

PRESIDENT’s MESSAGE

Greetings and welcome to the third issue of Connect magazine.

Where is this year going? It seems as if we just started 2013 and here Lana Hamadej, LSM , PCAM we are with the third quarter of our magazine. With that said, I want to give recognition to our awesome Magazine Committee led by Betty Roth. They do such a great job at providing interesting and informative articles for this publication. Thanks to all of them!

In May, the Legislative Support Committee again put on a great Evening at the Winery at the lovely Wiens Family Cellars Winery as their annual fundraiser. They exceeded last year’s contributions by collecting $8000 as a portion of our Chapter’s annual CLAC contribution. Congratulations and thank you Nancy Sidoruk and the entire LSC Committee for this beautiful and worthwhile event. I know that our guests Skip Daum and Assemblywoman Melissa Melendez were quite impressed with the event and our awesome Chapter volunteers.

June brought us our fabulous and elegant Monte Carlo event, Grand Voyage – A Night to Remember. And what a night it was. It was held at Pechanga and offered dining, dancing, gaming, prizes and the best thing about our Chapter, the opportunity to network socially with our members.

The committee worked very hard and absolutely outdid themselves this year in creating the elegant feel of a cruise ship dining room. If you missed out, plan on attending in 2014. It is an amazing production. Thank you to our Committee Chairs Brian Henry and Nick Mokhlessin of ValleyCrest Landscape Maintenance Inc. for steering this ship and capturing my ®

®

vision perfectly and to each and every person who took an enormous amount of time away from their paid jobs to stage this voyage. You are all appreciated.

CAI-GRIE offers countless opportunities for education, networking and fun.

The last quarter continued to bring informative luncheon programs and the opportunity to network at our Mini Tradeshows with our Business Partners. I am also excited to report that as of July, our Essentials Course for Board Members is now being offered as a four-part series, with a section preceding each of our Luncheon Programs. Please be sure to check our website cai-grie.org for

information and plan on attending to hear from industry experts about your role in leading your community association as a board member.

In closing, I want to remind everyone that CAI-GRIE offers countless opportunities for education, networking and fun. To benefit from your membership, you must participate. I look forward to seeing all of you at a future event. Please be certain to check out our chapter website cai-grie.org for a full calendar of 2013 events. As your 2013 President, please don’t hesitate to let myself or any member of the board know how we can be of assistance to you. Thanks for this great opportunity!

Best Regards, Lana Hamadej, LSM®, PCAM®

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EDITOR’s LINK It appears that the wonderful weather from spring has followed us into August. What a beautiful summer we are enjoying. We have many wellplanned events to look forward to as the summer moves along. Closest to Betty Roth us is the bowling tournament. The CMCA, AMS, PCAM committee works very hard to make this a very fun event. No one is ever disappointed. We also have the much anticipated Golf Tournament at Canyon Crest Country Club coming up on Monday, September 23, 2013. It is a lovely course and the committee has done a great job organizing this event.

The chapter elections and awards ceremony are not far behind.

This issue presents a series of articles focusing on Board Meetings. All the articles that were submitted are very informative. We will have articles touching on board meetings from a vendor’s perspective; the new interested director statue and conflict of interest; budgeting tips;

board meetings with community builder clients; stories from a board member; association liability management and much more.

We hope you will find the information in this issue useful and we appreciate your continued support of the GRIE Chapter and CAI. The topic for our next issue is Legal Wrap Up. We will be bringing you articles on assessment collections; cleanup legislation; commercial CID law; hot bills; construction defect claims; case law update and many more relevant articles.

We would like your input as well. The deadline for submitting articles for the next issue is November 1st.

It is very rewarding to have an article published and can also serve for points in achieving your accreditations. If you are interested in submitting an article, our policy and guidelines are available on the chapter website or feel free to email me at manager@mysunnymead.com and I will be happy to send you a copy.

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Toll Free: 800-345-8866 • Toll Free Fax: 800-262-0973 Email: SSegal@farmersagent.com • www.farmersagent.com/ssegal 8 |

ISSUE Three 2013 • Connect with grie

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connect with grie • issue Three 2013

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By dennis m. burke, ESQ.

O

The New Interested Director Statute and Conflicts of Interest

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n January 1, 2014, the “Interested Director” statute takes effect at California Civil Code Section 5350. Just looking at the title, one might think the Legislature was concerned that directors were not sufficiently interested in their associations.

But, thankfully, the statute does not deal with director attention spans or levels of interest. Instead, the statute concerns conflicts of interest and specifically prohibits a director or committee member from voting on the following matters: • discipline of the director or committee member; • an assessment against the director or committee member for damage to common area; • a request by the director or committee member for a payment plan; • whether to foreclose on a lien recorded against the director or committee member’s separate interest; • review of a proposed physical change to the director or committee member’s separate interest; and • a grant of exclusive use common area to the director or committee member.

Starting January 1, 2014, a director that falls into one of the categories above will be prohibited, by law, from casting a vote if the matter comes before the Board. This statute should have a positive impact on the industry.

But, in some respects, the statute does not go far enough. For example, not casting a vote in the abovedescribed scenarios will likely not be enough to avoid allegations of self-dealing or abuse of authority. A director facing one of those scenarios should consider removing and recusing him or herself from all Board deliberations regarding the matter, preferably even leaving the room when the matter is discussed and voted upon.

In some situations it might be appropriate to form an Executive Committee of the Board to formally exclude the interested director not just from the vote at issue, but from all votes on related matters. An Executive Committee consisting of some members of the Board can, in most situations, be formed by a majority vote of the Board to handle a particular issue or matter that would otherwise come before the Board. (There are some limits on what matters can be handled by an Executive Committee of the Board, so it would be prudent to check with legal counsel before forming the Executive Committee.)

For example, if a director on a 3 person Board is delinquent in the payment of assessments, the Board could form an Executive Committee of the Board

consisting of the other 2 directors to handle all issues regarding delinquent assessments. That way, the delinquent director is excluded from any Board deliberations or decisions regarding delinquent assessments.

Conflicts of Interest I am frequently asked if it is legal for an association to contract with a director or director’s family member. There is no statute banning associations from contracting with a director or director’s family member, so in that sense it is not illegal. If the director has a material financial interest in the transaction, failure to fully disclose that interest and have the transaction approved by a disinterested majority of the Board can render the transaction void or voidable.

(California Corporations Code Section 7233.) Also, effective January 1, 2014, the Interested Director statute takes effect banning a director from voting in certain conflict scenario (see above). But these statutes do not ban or prohibit an association from contracting with a director or director’s family member.

Even though conflict of interest scenarios are not prohibited by statute, they nevertheless should be avoided.

Actual or perceived conflicts of interest between a director and the director’s association are problematic.

When an association contracts with a director or director’s family member, controversy follows. Some residents will assume the deal is unwholesome and involves kickbacks and inflated pricing. Board members may be reluctant to criticize or question work performed by a family member of a fellow director. Unneeded controversy and acrimony invariably result.

Contracting with a director or director’s family member makes the Board’s job more difficult than it has to be.

Running an association is difficult enough. Avoiding conflict of interest scenarios will make the Board’s job easier and promote peace and harmony.

Dennis M. Burke, Esq. is Senior Shareholder of Fiore Racobs & Powers and is a senior attorney in the Firm’s Inland Empire office. Mr. Burke has been representing common interest developments for seventeen years.

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By jasmine fisher, esq.

An Examination of Best Practices for Association Liability Management

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pon appointment or election to a board of directors, volunteers face the challenging landscape of managing their association’s risk exposure. This article will cover the general tenants of risk; examine common areas of liability exposure and outline best practices boards can implement to help lower their association’s potential burdens in these areas.

Liability is anything an association may be responsible for, which can include a maintenance obligation, a financial responsibility, or any other manner of duties. Associations face liability from a variety of sources including contractual (violations of the CC&Rs) or statutory.

Typical statutory violations include negligence which is a breach of a duty of care as outlined in Civil Code §1714, failure to abate a nuisance as provided under Civil Code §3479, violations of the Davis-Stirling Act codified in Civil Code §§1350 et. seq. which can range from disclosure issues, levying or collecting assessments, enforcement claims and countless other issues. It is imperative boards understand the potential sources of liability so they can work to avoid or lessen their association’s exposure to the fullest extent possible.

Having outlined the common origins of liability, next I will detail the manner in which boards need to examine and respond to these potential risks. The good news is that even bad board decisions typically receive protection from liability. While this tenet remains the law of the land, courts have started chipping away at that protection when circumstances warrant an exception. The Affan v. Portofino Cove Homeowners Assn.(2010) 189 Cal. App. 4th 930 case established an association can be liable, even if the board responded to a situation, if the board failed to reasonably investigate the underlying issues causing the problem in the first place. Countless cases including Frances T. v. Village Green Owners Assn. (1986) 42 Cal. 3d. 490 have held that boards have an affirmative duty to reasonably investigate issues and perform their duties and they must also ensure their actions are in the best interests of their associations.

Liability is anything an association may be responsible for, which can include a maintenance obligation, a financial responsibility, or any other manner of duties.

Civil Code §1365.7 (if certain criteria are met), most governing documents and numerous cases have upheld liability protections for boards and their associations, even when their decisions turn out badly. Boards should take the following steps when making decisions in order to help protect themselves and their associations in the event something goes awry after the fact: Minutes – Unless the association must follow a specific parliamentary procedure under the bylaws, boards should utilize their meeting minutes to reflect key points from the board’s discussion on a motion and why its decision was approved (or not). This helps remove speculation on the actual basis of a board action and can also help establish why the decision was reasonable in a proper context.

Resolutions – Because minutes should not be a literal transcript of meeting discussions, there are times when a board makes a decision where it is appropriate to adopt a resolution. A resolution is a written motion approved by the board that more extensively details the rationale behind a particular decision. Resolutions are appropriate when granting exceptions, variances, or related to contentious issues.

Association wide communications – While many owners prefer to be left alone, others need communication. Boards can often lower potential for a community lynch mob by proactively communicating with their members. Most commonly used for litigation updates, assessment increases or community wide repair projects, boards should send updates when hiring or firing a long-term or high profile employee, to provide disclosure of important issues (most especially if it relates to a life-safety issue the community may bear the costs of resolving), and issues that perpetually find themselves in the community rumor-mill. The added benefit of these communications is they may lessen the likelihood of a member cornering a director or manager and potentially getting a different Continued on page 14 connect with grie • issue Three 2013

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An Examination of Best Practices Continued from page 13

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In a perfect world, boards would only make good decisions and their associations would not face liability because the outcomes of their decisions were satisfactory. In the real world, however, boards make difficult choices and sometimes things do not work out well, even with the best of intentions otherwise. Boards that implement the recommended strategies can help lower their association’s exposure to risk long after the event occurs by establishing the corporation’s reason for taking the action when it was made and not allowing it to be second guessed after the fact. A side benefit of these recommendations is they help lessen the potential for false rumors and increase transparency which are also important outcomes.

*CDARS is a service mark of Promontory Interfinancial Network, LLC. FDIC Insured up to $50 million per Tax ID.

Jasmine Fisher is a Senior Associate at Adams Kessler PLC who has been practicing for over 10 years and specializes in representing common interest developments as general counsel.

You can reach Jasmine at (310) 945-0280 or jfisher@davis-stirling.com.

TOPS Awards December 13, 2013 It’s not too soon to start thinking about nominating an association client, a manager co-worker or that business partner that just goes above and beyond! All nominees must be a member of CAI-Greater Inland Empire, so please check with the Chapter office before submitting.

To submit a nomination, please go to the following location on the Chapter website: www.cai-grie.org eforms TOPS Nomination Form 14 |

ISSUE Three 2013 • Connect with grie

Budgeting Tips for Board Members

By Jan Hickenbottom, PCAM®, CCAM®

Y

ou’ve probably heard this story: The board decided to schedule a special meeting for the specific purpose of adopting a budget for the next fiscal year. On the day of the meeting, all five board members were seated and the president called the meeting to order. The treasurer said, “We are meeting today to determine whether we want to increase our assessments for the coming year. I move we don’t.”

The president says, “All in favor say ‘Aye’.” Five “aye” votes resounded.

The president said, “Meeting adjourned.” The special budget meeting ended with the same result as the association’s special budget meetings for the past ten years.

Boards should not ask themselves, “Do we want to increase the assessments?”, because the answer will probably be, “No!” This could be the self-serving answer, but board members have a duty to adopt a budget based on better judgment than, “What do I want to pay for the monthly

assessment next year?” The board should ask instead, “What amount should we be budgeting in order to have sufficient funds for our operating expenses and reserve funding for the next year?” Civil Code Section 1366(a) [5600(a) after January 1, 2014] states that “… the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents…” The board is responsible for carrying out this duty for the association, unless “sufficient” requires an increase of more than 20% higher than the previous year’s assessment. An increase of more than 20% would require an affirmative vote of the membership, unless the board can provide documentation to show that the increase is an emergency assessment. If an assessment increase or a special assessment higher than the board’s authority is needed, then the board has a duty to explain the association’s financial needs to the membership, propose the assessment increase or special assessment that is

Many associations that are 20 to 30 years old or older are struggling with budgets and reserve funds that are woefully insufficient. This situation does not occur overnight.

Continued on page 16

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needed and put it to a vote of the owners. The board’s budget decisions can affect the financial stability of the association many years into the future.

In planning next year’s budget, here are some issues that the board should consider: Landscape Expenses – For many associations, landscaping is one of the most expensive line items on the budget. Include an adequate amount

in your operating budget for seasonal plant replacement, mulching, shrub maintenance, tree trimming and other costs beyond just mowing, weed control and fertilization. Your reserve budget should include shrub and tree replacement as needed so that your association’s landscape never looks dated or unattractive. Look at your association with the eyes of a firsttime visitor or a real estate agent. Curb

appeal is important. A well-maintained association results in residents who have pride in their community association. The residents are more apt to have a positive attitude about their association as a whole when the grounds are well-maintained.

General Maintenance – Don’t ignore the aging process. Each year, preventative maintenance becomes more expensive as equipment and other components get older. Anticipate that you will have emergency repairs and plan accordingly for both your operating expenses and reserve allocations.

Roofs – If your roofs are failing, perhaps it is time to stop budgeting for the “Band-aid” repairs in the operating budget and use the reserve funds to properly repair or replace it. Water intrusion resulting from a bad roof can eat up a lot of dollars in repair costs and legal expenses. Associations often find that delaying roof repairs results in far more wood replacement than the eye can see. Be prepared for surprises.

Board members are not expected to be roofing experts so budget appropriately to hire the experts that you need. It’s worth the expense and it is necessary.

Legal Advice – The board should adopt a budget that allows for the professional advice that the association needs. Interpreting the governing documents and enforcing them is a task that requires legal advice from attorneys whose practice is focused on community association law. Issues that are beyond the understanding of board and management will likely arise, so ensure that the budget is adequate to keep the association out of legal trouble. For example, the attorney can often rescue the association from entering into a bad contract or he or she can modify the terms of the contract to prevent a problem. That preventative action is much cheaper than trying to extricate the association later when the relationship goes awry.

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ISSUE Three 2013 • Connect with grie

Management, Contractors and Other Service Providers – Costs increase every year. Your support team deserves respect and deserves to be adequately compensated for the work that they do. If you are satisfied with their services, do not switch companies just to save a few dollars and don’t get other bids just to force them to lower their contract costs.

Remember that the association is a nonprofit entity but the companies that you hire are not! They need to make a buck here and there to stay in business. Set a tone of trust and respect with all of your contractors and it will pay off when you need their services in an emergency.

Contingency – It is impossible to anticipate every expense. Put a contingency line item in your operating budget for unexpected costs that are not covered by your existing line items in the operating budget or your reserves. This could

be used for writing off bad debt or paying insurance deductibles or other unanticipated expenses when there is damage or loss. Many reserve study providers recommend a 3% - 5% contingency in the reserves for small items that are not included as the major components.

Education for Board Members – An educated board is an asset to your association. It is important to allocate funds so that the association can join CAI and board members can attend CAI classes, workshops, luncheons and other events. They will learn how to properly operate the association and how to find the resources to guide their decision-making. They will meet the professionals and service providers that they can turn to when the need arises.

Every year’s budget is important.

Many associations that are 20 to 30 years old or older are struggling with budgets and reserve funds that are

woefully insufficient. This situation does not arise overnight. The past boards repeatedly failed to budget adequately for the association’s operating expenses and reserve funds…year after year after year.

Don’t let that happen on your watch.

Adopting a sufficient budget is your fiduciary responsibility and it’s the law.

Jan Hickenbottom, PCAM, CCAM is the Vice President of First Bank in the Association Bank Services division. She has been an active member of CAI on the national and local level for over 30 years.

She is the author of the book, “Questions & Answers About Community Associations” which is available at www.

CAIonline.org.

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Board Meetings from a Business Partner’s Point of View

BY TOM CARRASCO

B

oard meetings can be very unnerving for Business Partners that are asked to attend. Many times we will not be asked to a board meeting unless there is an issue at the properties we service.

The anticipation is always worse than the actual time that we attend, but when used right, this time can be very valuable to our businesses.

Don’t wait until you are called to a meeting. To develop a strong proactive relationship with both the property manager and the board, request that a representative from your company attend regularly. Many times items come up from homeowners or the board before they become major issues. When a board member or manager identifies an issue, it is much easier to approach and discuss this openly with a familiar face. Always come prepared with a typed report 18 |

ISSUE Three 2013 • Connect with grie

or bullet points to hand out to the manager and the board.

When attending a board meeting, take the time to explain your ideas and goals for the community.

Board meetings can be both a revenue source and a vehicle for the board to reach their goals if approached right. When attending a board meeting, take the time to explain your ideas and goals for the community. This process begins months before or when you are bidding the property. These goals are

a combination of input from the board, the manager and your own expertise.

A vendor should educate themselves on the board’s goals for the property on a regular basis. Whether it’s asking at the bid interview or on the monthly walkthroughs, a major part of our job is to know what the customer expects!

When presenting these goals, come prepared with visual renderings, return on investment information and concise proposals. By having all of this information and presenting the ideas well, your close rate will dramatically increase. Never, ever allow a large proposal to be discussed at a board meeting without asking to be present! Remember that no board or manager will want to spend money with a company that does not fulfill their promises or is producing a bad product, so start with the scope of work.

When faced with being called to a board meeting for negative reasons, come with a “hat-in-hand” attitude and be organized. Even when there are tough issues to be discussed, being organized is very important, especially when the issue may not be your fault. To respectfully disagree takes organization, visual exhibits and must be properly communicated to not sound defensive or placing blame.

Always follow with the plan so as not to have the issue happen again.

Whatever the solution make sure that all parties understand the plan when you leave the meeting and follow-up by communicating the new procedure with the employees in the field.

When we are at fault, we must come to the meeting organized with a plan to fix the issue and a concise time for completion. A company is judged on how it solves its mistakes not the mistake itself.... providing it doesn’t happen multiple times. We have all been faced with these challenges at times but it is how we communicate

the solution that dictates the severity of the outcome.

My final thought and key to success with board meetings: communicate the changes or issues to the staff in the field following the board meeting, along with the solutions. Follow up to make sure that these solutions are complete. Most of us, if we are honest, have at one time or another come up short on this very important final step.

Board meetings can be exciting, nerve-racking, frustrating, revenue

building, goal sharing, plan implementing and scary… all within the same night. As my Dad used to tell me “Son, it’s all in the approach.”

Tom Carrasco is the President/CEO at Environmental Concepts Landscape Management Inc. Tom received a B.S in Landscape Design from Virginia Tech, is a Certified Arborist, Licensed Pest Control Advisor though the State of California and a Licensed Qualified Applicator.

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Continued on page 20 connect with grie • issue Three 2013

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Education: It’s Essential!

BY BRIAN D. MORENO, Esq.

The Essentials of Community Association Volunteer Leadership The Essentials course is an 8-hour course – broken up into 4 different parts – designed to enhance the knowledge and skills of community association leaders by addressing the following subjects: Overview of CIDs: Attendees learn about the industry, the legal foundation of the various types of associations and the roles of the people who help make associations function.

Rule Enforcement: Attendees learn how to adopt and revise rules and regulations; how to enforce the community association’s rules in a fair and legal manner; and how to gain a violating owner’s compliance with the governing documents.

A

common interest development (CID) is many things. It is a corporation; it is a business; it is a community; and it is

a real estate project. Thus, California CIDs are subject to a multitude of laws and confronted with a wide range of challenging issues. CIDs must be managed intelligently and responsibly.

In this regard, community association leaders should be educated about the various aspects of CIDs and the numerous issues that affect their communities.

One of the goals of the Community Associations Institute (CAI) is to provide information and education to community associations and the professionals who support them. To this end, the Greater Inland Empire Chapter of CAI formed an Education Committee

Finances: Attendees learn how to read financial statements; create, fund, and maintain a reserve account; protect association assets; and identify the financial problems of a hypothetical association.

Insurance: Attendees learn the various types and levels of insurance required for community associations. Attendees learn about deductibles and insurance requirements imposed on the community association by the CC&Rs. Maintenance & Problem Solving: Attendees learn how to evaluate the maintenance responsibilities of the community association versus the owner. Attendees also learn routine, preventative and deferred maintenance. In addition, attendees learn an approach to problemsolving that will help community leaders face and solve the myriad of problems that occur in community associations.

Board Meetings: Attendees learn the ins and outs of board meetings, including the notice requirements, board duties, voting requirements and limitations, agenda, open forum, quorum requirements, parliamentary procedure, motions, etc.

that has, among other things, designed educational courses for industry leaders. The

Board Fundamentals Course

GRIE Education Committee has developed two

As the name implies, the Board Fundamentals Course is aimed at educating board members and providing useful information that can be used to further the interests of community associations. The course is 3 hours and teaches attendees the fundamentals of being effective representatives of the community in which they have an interest. The course is usually held on a Saturday and covers several important subjects relating to a board member’s duties and responsibilities as well as various challenges that board members face.

courses that are taught by experienced and wellspoken industry professionals: (1) Essentials of Community Association Leadership, and (2) Board Fundamentals Course. Each course covers important topics, issues and laws affecting community associations in California.

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ISSUE Three 2013 • Connect with grie

CID Types and Property Ownership Interests: Attendees learn the various types of CIDs and respective ownership interest for each type.

Governing Documents: Attendees learn about the documents that control and govern a community association, including the CC&Rs, Bylaws, Rules and Regulations, etc. Attendees learn how to amend and supplement the governing documents and the limitations for each.

Volunteer Director Responsibilities: Attendees learn about fiduciary duties and the fiduciary relationship between board members, the association and the membership.

Volunteer Directors – Liability and Business Judgment Rule: Attendees learn about the critical role of the Business Judgment Rule in our industry as well as the concept of Judicial Deference relative to board decisions that are made properly.

Basic Financial Responsibilities: Attendees learn about reserve accounts and funding; annual financial documents that must be distributed; assessments and assessment collection; and other basic financial duties.

Membership Meetings: Attendees learn about the different types of membership meetings; the notice requirements; agenda items; types of motions and actions passed; proxies, secret ballots, and voting requirements.

Board Meetings: Attendees learn the ins and outs of board meetings, including the notice requirements, executive session topics, board duties, voting requirements and limitations, agenda, open forum, quorum requirements, parliamentary procedure, motions, etc.

Architectural Review: Attendees learn about the restrictions and limitations placed on board members relative to architectural review.

Due Process for Members: Attendees learn several rule enforcement procedures and tips for avoiding an invalid process and owner challenges.

law. Thus, industry leaders can benefit immensely from these two courses, as the information provided will improve your knowledge and understanding of the unique issues CIDs face on a regular basis. If interested in attending either course, you should contact the Greater Inland Empire Chapter at (951) 784-8613 for more information. The Chapter website is www.cai-grie.org.

Dispute Resolution Tools: Attendees learn the statutory dispute resolution procedures and effective ways of confronting disputes and rules violations.

Both courses can be a great way for board members and industry leaders to educate themselves about the complexities of community associations as well as the subtle rules and restrictions that continue to evolve and change the way communities are governed. Since 1985, the DavisStirling Common Interest Development has been revised and supplemented extensively, and on January 1, 2014 the new Davis-Stirling rewrite will become

Brian D. Moreno is a Senior Associate with the law firm Richardson Harman Ober PC. His legal practice encompasses the representation of community associations of all types and sizes as well as real estate litigation. Mr. Moreno is an active member of the Community Associations Institute and is the Chair of the Greater Inland Empire Chapter Education Committee.

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connect with grie • issue Three 2013

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Meeting with the Board and the Community’s Builder

By Jeri Mupo, CCAM

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ISSUE Three 2013 • Connect with grie

O

ne of the most stressful job responsibilities for a community manager is attending the board meetings. This is the moment where you receive your periodic evaluation from the homeowners and your community builder board members. However, with a little planning and a lot of education and communication, the board meeting can be very productive and almost stress free.

I believe that in new communities most new homeowners are curious about what happens at the board meetings. Many have never owned a home or lived within an association before. As the management representative, you can set the tone of the meeting by introducing yourself and the community builder to each of the owners as they arrive and make them feel welcome.

At the beginning of each meeting, it is important to explain the ground rules on how the meeting will be conducted. Explain that this is a homeowner’s association meeting for addressing association business only. If there are home warranty issues, the homeowner will need to contact the community builder’s Customer Service Department. To be helpful, I will bring Warranty Forms and leave at the sign-in table. Also, if the community builder is able, I request that a Customer Service Representative be available to address the homeowners after the meeting.

With a little planning and a lot of education and communication, the board meeting can be very productive and almost stress free.

On occasion, you may have the one (or two) homeowners that believe the builder is on the board to “control my life” and to “take advantage of the association.” In order to reduce the “us” versus “them” feeling, take a moment to explain why the builder is serving on the board. The primary reason most builders retain the majority of the board seats is because they have the highest financial responsibility within the community. They are serving on the board to make sure their investment is protected and their vision is completed. In most cases, unless an issue materially impacts the community, the builder will agree with homeowner’s requests. For example, if the community wants to

reasonably change the pool hours, the builder would agree. However, if the homeowners want to fill in the pool and build a tennis court, they obviously would not be in favor of the change.

The builder also serves on the board to make sure there is a smooth transition from builder control to homeowner control. As new homeowner board members are elected to the board, this provides an opportunity for the builder to share the history of the community and slowly transition responsibility to the homeowner members.

During the meeting, there are a lot of terms that are used by the builder and community manager i.e. bond releases, turnover inspections,

subsidies, etc. Take a moment to educate the homeowners and explain what each term means, how it affects the community, and what the builder has to do to fulfill their obligations; this will show that this is a routine business practice and the builder is not taking advantage of the association.

I think the most important advice for an effective and productive homeowner/builder meeting is to be a great communicator. Encourage everyone to treat each other with respect, even in disagreement. Be clear in the association’s direction and open to receive differing opinions. The manager, builder and homeowners should recognize that each person is part of a team. And, it takes everyone to build synergy and a successful community.

Jeri Mupo, CCAM® is the Director of Developer Relations at Euclid Management Company.

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Continued on page 24 pacificwesternbank.com connect with grie • issue Three 2013

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T

CAI Legal Forum: California Communities By kimberly lilley

his fall, October 18 2013, at the Irvine Marriott, CAI will be holding the 4th Annual Legal Forum established to educate managers and homeowners involved with community associations regarding the laws that affect their functioning in the state of California.

Our key note address is the State of the Industry presented by Dawn Bauman, CAE, from CAI National, where she looks at the main players in the community association industry throughout the nation. She will discuss the challenges, opportunities and trends affecting managers, homeowners and business partners alike, as well as the interaction of Legislative Action Committees that support responsible governance. Then, concurrent sessions are presented - a community manager program, and a homeowner/board member program. Here are some of the highlights: Managers, you can look forward to sessions preparing you for arbitration – the process; should you agree to an arbitration provision in a contract?; should you amend your arbitration provisions in your CC&Rs?; Security & Safety – disaster preparedness; criminal activity; the liability of security measures; Association Lawsuits – notifying the insurer; guiding the board; depositions; and Evolving

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ISSUE Three 2013 • Connect with grie

Trends – hoarders; smokers; nuisance policies and practices.

Homeowners/Board Members, your line-up includes Ethics – avoiding claims and lawsuits; identifying ethical issues; legal responses; DavisStirling Act Revision – new codes; new costs; new disclosures; Dispute Resolution – summary remedies; judicial reference services in lieu of arbitration; administrative processes; Ask the Attorneys – the always-popular chance to hear different opinions on a topic near and dear to your heart.

This year, advanced education topics are also being presented on Reasonable Accommodations, Disclosure Requirements, and Dealing with Difficult People.

Lunch is also provided, along with a trade show where you can discover the latest in the industry and make contacts that make your job easier.

For more information, talk to DJ in the chapter office, or go online to www.caionline.org.

Kimberly Lilley, with Berg Insurance Agency, is the PR Chair of the California Legislative Action Committee and can be reached at kimberly@berginsurance.com.

You Did It! CAI-GRIE Exceeds 2013 CLAC Contribution Goal CAI-GRIE is sailing to success with another stellar year of member support for CAI’s California Legislative Action Committee (CLAC). The chapter exceeded its entire 2013 contribution goal of $16,582 by mid-year! Congratulations!

How did you contribute? Through your community association’s Buck-a-Door program? Sponsoring or participating in our 4th Annual Evening at the Winery or Legislative Day at the Capitol? Attending chapter luncheons? As an individual donor? If you did any or all of these, thank you, and watch for a list of 2013 donors in a future issue of Connect.

Your continuing help is critical to the operation of CLAC this year and in the future. So don’t stop now! Every dollar counts and is directed toward CLAC’s non-profit, non-partisan efforts. These efforts include monitoring, supporting and opposing legislation directly impacting community associations, as well as educating legislators about community association living and governance.

To learn about contribution options, what’s going on in Sacramento and more, visit www.caiclac.com.

Sign up for e-mail alerts at www.votervoice.net/CAICLAC/Register.

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FRIENDS OF CLAC SPONSORS Berg Insurance Agency Fenton Grant Mayfield Kaneda & Litt, LLP Merit Property Management, Inc. IRC & The Termite Guy FLOOR SESSION LIVE ENTERTAINMENT SPONSOR 1 Stop Pool Pros, Inc. Landscape Development, Inc. Voit Management CABINET MEMBER COCKTAIL NAPKIN SPONSORS DeNichilo & Lindsley LLP Equity Management, AAMC Royal Promotions Urban Tree Care, Inc.

connect with grie • issue Three 2013

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Let the Good Times Roll at Cosmic Bowl!

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ISSUE Three 2013 • Connect with grie

lution for CAI-CLAC Community Association Board Reso Contribution solution Community Association Board Re for CAI-CLAC Contribution

“Association”) board tion (hereafter referenced as the Whereas, The ____________ Associa owners in the community; and serves in the best interests of all to manage the assets of s have the fiduciary responsibility Whereas, The Association director practices and principles, ifornia law, established business the Association according to Cal e; and and positive community governanc and pursuant to competent, ethical ocate for s Institute (CAI) is the leading adv Whereas, Community Association regulatory and ive slat legi eral ore state and fed common-interest communities bef bodies; and resents the interests of tive Action Committee (CLAC) rep Whereas, CAI's California Legisla efits community nia, sponsors legislation which ben community associations in Califor California community and disseminates information to associations and their members, es; and associations about legislative issu ocacy efforts; and benefit directly from CLAC's adv ts den resi tion ocia Ass re futu and Whereas, Current CAI members and ed solely through contributions from fund are rts effo C's CLA as, ere Wh rs in California; and fundraising efforts by CAI chapte s nonprofit tax status; and AC will not affect the association’ -CL CAI the to g utin trib Con as, Where rd membership package; and ociation invest in a full or partial boa Ass the t Tha d, olve Res it be Wherefore annual contribution to tion that the Association make an That it is the policy of the Associa the Association; and in t) _, that is, ($1/$2) for each (unit/lo CLAC, in the amount of $ ______ ution to CLAC in the get shall include an annual contrib That the Association’s annual bud amount of $_______; and s to take advantage of the ourages its manager and director That the Association strongly enc e legislation that allows arding pending and enacted stat information provided by CLAC reg ity associations under ts and responsibilities of commun them to keep abreast of the righ California law. __________ in the year ______.

ECTORS on this, the ______ day of DIR OF ARD BO THE BY ED OLV SO RES _________ ______________________________ Secretary of the Association

Continued on page 28

connect with grie • issue Three 2013

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Yea! I’m on the Board!

Or OMG, What Did I Get Myself Into?

B

oards serve a necessary function in any corporation, and especially within a homeowners association. It would be impossible for an association to function without one. In an association, the buck ultimately stops with the board. However, most people are elected or appointed to the board without fully understanding the role of the board, and their obligations as board members once they accept the position.

The board is elected by the members of the association to accomplish the tasks required of an association by the governing documents. Volunteer board members are accountable to the association itself, as well as to the owners within the community. While the board can, and should, rely on opinions of experts and information presented by committees, decisions affecting the community are the ultimate responsibility of the board, and the board members will be held accountable for these decisions.

While the position is voluntary, board members should take their fiduciary responsibility to the association and its members seriously.

Despite the important role

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ISSUE Three 2013 • Connect with grie

the board plays in the association, board members must keep in mind that they have been elected by the members of the association to conduct the business and affairs of the association. Board members should not become power hungry or otherwise harass owners. Likewise, owners must respect the authority of the board to conduct the association’s business and enforce its documents.

Board members must remember that the owners must be kept informed of the board’s activities and make sure that proper communication with the other owners is maintained.

In deciding what to communicate to members, board members should consider what they would like to know and how they would like to be treated as a non-board member owner, and strive to act in that manner as a board member.

Fiduciary Duty & Business Judgment Rule

In addition to the duties set forth in the CC&Rs, Bylaws and Articles of Incorporation, board members have additional duties imposed by law.

While all of the duties and obligations of a board member cannot reasonably be set forth in a short article, we will

highlight some of the most important duties and obligations a new board member must understand: that of their fiduciary duty to the association and its members, the business judgment rule, and the duty to keep communications with the association’s attorney confidential.

All board members have a fiduciary duty to act in the best interests of the association. The fiduciary duty is the highest duty of care and loyalty recognized by law. It is the same duty owed by a doctor to a patient and an attorney to a client. So what does the fiduciary duty require of each director? The fiduciary duty requires directors to act with undivided loyalty; to act in good faith; to deal fairly; and to put the best interest of the association and the members before their own personal interests. A board member may not place his own interests ahead of the association or the membership.

Newly elected directors are often unsure of how to meet their obligations to the association and its members and fulfill their fiduciary duty. A director’s actions are judged under the standard of the “business judgment rule,” which is set forth in California Corporations

code section 7231. Simply put, the “business judgment rule” requires that a director act in a way which they believe would be in the best interests of the association and its members.

In meeting this obligation a board member may (some would argue must when the board members lack the required expertise on a subject) rely on information, opinions, reports or statements of experts whom the board member believes to be reliable and competent regarding the issues the board is evaluating. In addition, the board may rely on information, opinions, reports or statements prepared by: “one or more officers or employees of the corporation whom the director believes to be reliable and competent in the matters presented,” or, so long as the board member is not a member of the committee, they may rely on a committee of the board on matters related to its authority.

In addition, a board member may rely on the advice of a third party on matters related to the third party’s expertise. However, whenever a board member is considering the advice of a committee or a third party, they cannot rely on the advice if they have knowledge of facts which would call into question the competence of those presenting the advice. If a board member meets this standard, they will have fulfilled their obligations to both the association and the members.

Notice that the business judgment rule requires “action” (you must act in such a manner that you believe to be in the best interests of the corporation; act in good faith . . .); the business judgment rule does not protect a board member when they fail to take action. Therefore, it is important to actually make a decision on an issue, any decision so long as it is reasonable based on the situation, in order to have the protection of the business judgment rule. That means that board members should not avoid dealing with an issue which they know about if it requires board attention.

Investigate, gather facts, seek expert

advice, decide to revisit an issue if it is not an emergency, but in order for the board to obtain the protection offered by the business judgment rule some action must be taken. Simply tabling an item does not provide the protection of the business judgment rule if the item needs the attention of the board.

As part of the decision making process, under the business judgment rule board members have a duty to make “reasonable inquiry” when making a decision. This not only gives a board member the opportunity for good legal, accounting or other expert advice, but it offers board members the ability to protect themselves and the association from liability. A board should not use limited financial resources as an excuse for not seeking the advice of their legal counsel, CPA or other expert regarding an issue.

Meeting this “reasonable inquiry” requirement provides both the board members and the association a significant amount of protection from liability that they would not otherwise have.

Attorney Client Privilege

All communications between the board and its attorney are privileged.

That means that the contents of the communication, whether written or oral, are confidential and cannot be disclosed to a third party. The privilege is held by the association.

The individual board members may not disclose the contents of a privileged communication without board approval. That means a board member should not discuss attorney client communications with anyone other than other board members and management. While it may be tempting and seem harmless, sharing attorney client communications with a spouse, a neighbor, a work colleague, etc., can not only result in a loss of the attorney client privilege, but may expose the director to personal liability for a failure of their fiduciary duty to the association. Therefore,

individual board members should never act on their own to disclose privileged communications.

The attorney client privilege is an important right. It is designed to allow the board to candidly discuss and disclose information to and from its attorney. Giving up of the attorney client privilege should not be done lightly or without careful consideration and thought.

Conclusion

Again, there are many duties and responsibilities with which newly elected or appointed board members must be familiar with. In addition to knowing and understanding their fiduciary duty, a board member must familiarize themselves with various financial oversight requirements, such as the requirement to review financial statements at least every three months, to investigate and make reasonable inquiry on matters relating to member discipline and others. Understanding and acting in compliance with the business judgment rule will go a long way to ensuring that a board member, and the board itself, is satisfying its fiduciary responsibility to the association and its members. Any board member who is unclear on how to satisfy the business judgment rule and meet their fiduciary obligation with respect to any particular issue should contact the association’s legal counsel and discuss the matter.

Robert M. DeNichilo is a partner in the law firm of DeNichilo & Lindsley, LLP, and specializes in community association law. He publishes a blog on association related topics at HOABrief.com. He serves on the Legislative Support Committees of the GRIE and OC chapters of CAI, the Education Committee of the Orange County Chapter of CAI and the CLAC PR Committee, as well as serving as the OC liaison to the CAI California Legislative Action Committee. You can follow Robert on Twitter @HOA_Lawyer, or reach him via email at rd@denichilolindsley.com

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The One Hour Board Meeting Steps to Holding Effective Meetings

A

ssociations typically hold meetings of the Board of Directors monthly, semi monthly or quarterly. In order to make certain that the meetings are effective and meet the goals of the board, it is important that the board president and management work closely on developing the timed agenda for each meeting. Doing so not only sets a professional meeting tone, but helps to encourage future leadership for the community. After all, who wants to become part of a dysfunctional board whose meetings last for many hours? Before the meeting, develop a timed agenda and make certain that board members have a process and timeline to add items to the agenda. Distribute the agenda and supporting materials (the Board report) in advance of the meeting, no less than seven days works well.

Board members are responsible to read the materials in advance of the meeting date. As a manager, it is a good idea to contact board members a day or two in advance of the meeting to find out if there are any questions or additional information needed. This will allow time to obtain answers that will enable the board to make informed business decisions at the meeting. Not having the information may delay the decision and cause frustration among board members, management and homeowner attendees. Some will see the meeting as ineffective and claim that “nothing gets done.” The few minutes of making a phone call or sending an email asking for questions will prove well worthwhile. And should you have that board that seems to have difficulty in meeting their quorum requirement; the advance contact will alert you to any possible absences.

Where the meeting is held is important and further sets the tone for the meeting. Remember, the meeting is a business meeting and should be conducted accordingly.

Using a meeting room, when available as opposed to a board member’s home is preferred. Choosing a location that will accommodate the number of people who might attend is also key. Small rooms will create tension and become stuffy.

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ISSUE Three 2013 • Connect with grie

and setting a goal to end at the stated time continues to set the businesslike professional meeting tone. Follow the agenda and stay on target. While it is easy to have unrelated topics arise, the President should bring the board members back to the agenda and stay on target. Stick to the agenda and remember that homeowners in the audience shouldn’t be allowed to provide input throughout the meeting. Their time to speak is during Open Forum. Making sure that homeowners understand this and adhering to this really aides in sticking to the timed agenda. Remember that the meeting is a meeting of the board; it is not a meeting of the homeowners. Most importantly, end on time.

While the homeowners do not participate during the meeting other than during Open Forum, having an adequate number of agendas and handouts available will make them feel part of the meeting and keep them informed on what the board is deliberating on. Don’t forget to bring a sign-in sheet so that the manager can update relevant contact information and to maintain as part of the record of the meeting.

After the meeting, it is best to prepare the minutes and action list as soon as possible. Forwarding the draft minutes and action list to the board insures that the manager understood the board’s directive and will take appropriate actions based on the business decisions made by the board. It eliminates any miscommunication.

Implementing some simple tips such as indicated here will certainly help in holding professional meetings and keeping the time to a minimum. Good meetings are products of good leadership. It will make serving on the board more fulfilling and will help to encourage the future leadership of your community.

Lana Hamadej, LSM®, PCAM® is the Vice President of Avalon Management Group, Inc. with offices in Canyon Lake and Temecula. She currently serves on the CAI-GRIE Board of Directors and is the 2013 Chapter President. Ms. Hamadej is also a Chapter Past President.

connect with grie • issue Three 2013

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